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CNN IN THE MONEY

China Food Exports; Dairy Prices Rising; Northwest Airlines; New Hampshire Couple Evading Taxes; Tax Code Unfair

Aired July 1, 2007 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ALI VELSHI, CO-HOST: Welcome to IN THE MONEY. I'm Ali Velshi.
CHRISTINE ROMANS, CO-HOST: And I'm Christine Romans. Coming up on today's program, why your milk cost more and how much higher the price tag at the grocery store could be.

VELSHI: And cheese. Also ahead, finding out if you paid too much tax or whether it just feels that way.

ROMANS: The answer is yes.

And later, either you're scrooge or a big spender as we check America's charitable giving.

VELSHI: Well, this has been a week that has been very tough for me, because we've had some food issues. I found out how much more my milk costs than I thought it did. We've sort of been hearing about prices of food going up. So, there's one problem there with things costing more and then a whole other problem with fish coming in that's not, you know, maybe up to standards, coming from China.

Now, the problem with talking about things that come from China is, look at your kitchen, your medicine cabinet, your toy collection, your clothes, whatever you've got. You probably got a lot of stuff that's made in China. It's you know, inexpensive. It's been part of our headover heels love affair with cheap stuff.

ROMANS: And over the last three months U.S. officials tagged a number of these Chinese products as potentially harmful among the items this week, toothpaste and certain types of fish. Now, Beijing says it's goods are safe, but the question is, you know, who's making that call and can you trust what they're telling you and what's the United States government doing to check things that are coming in?

VELSHI: Yeah, and we've been trying to figure it out. Where does the problem lie? Is it on the side the country that exports to the United States or right here? So, we decided to ask about this. We're joined by Chris Waldrop, he's in Washington, he's the director of the Food Policy Institute at the Consumer Federation of America.

Chris, thanks for being with us.

CHRIS WALDROP, FOOD POLICY INSTITUTE: Thanks for invite meeg.

VELSHI: Is there a simple answer to this? Is this a China problem or is this an America problem? WALDROP: There's not a simple answer. The blame lies in a number of levels. China does not have the same high food safety standards we expect here in the U.S., but at the same time, the FDA has been chronically under funded the past several years and doesn't have the resources to ensure that the imports coming in are as safe as they really need to be.

ROMANS: Something like one percent of those imports are inspect by the FDA. At the same time we've seen imports explode of all kinds of things that we're that we're eating and using every day. I mean you go back to pet food and you start from there and it's been sort of a cascade of issues.

What am I supposed to do? I mean, am I supposed to look at the label? How do I even know if some of these ingredients manufactured in this country are from China in the first place? What did I do?

WALDROP: That's part of the problem. The consumer shouldn't have to sort out some of these issues, especially ones that relate to safety. We should be expected -- all the products that come in to tis country are safe as they, the U.S. standards are and consumers shouldn't have to kind of look through that.

ROMANS: You're saying they're not. All the things coming in to this country are not as safe as you standards are?

WALDROP: I'm saying, there are some countries, China being the one in the spotlight right now, that doesn't have the same standards and so the things coming in to this country don't meet the standards. They're using ingredients we don't allow. They're using anti- microbial agents that are banned in the U.S. and that's a real problem, if they're coming in to the U.S. and consumers are eating them.

VELSHI: We also saw about the tires that apparently came in to China, distributed by an American distributor, and they didn't have the glue or the gum that keeps the tire together. I guess there are a lot people assume when you bay product in the United States that's imported from another country, somebody had to look at the standards. Maybe that particular batch was bad, but somebody had to say, this stuff meets or standards. I clearly I'm off base thinking that.

WALDROP: You expect that. You expect everything you buy in the stores to be up to the standards that, you know, we expect of U.S. consumer, but that's simply not the case. China does not have handle on consumer product safety or food safety in their country. And as a result, we're seeing these incidents over and over and over again.

ROMANS: You know, when we talk about some of the big multi- national companiesip porting these products, and it behooves then and their brand identity to make sure what they're bringing in, if it's not going to be inspect by the United States government or the Chinese government, they've got to make sure that what they've got in is safe. And I know I talked with somebody for the Center for Food Safety a while ago, a few weeks ago actually, who said that General Mills, Sara Lee, Kraft, some of these big companies are spending a lot of money make sure what they bring in is good. How important is for these companies making sure what I'm buying on the shelves is safe?

WALDROP: You said, companies have a strong brand they will do everything to protect., So in order to protect that brand they're going to make sure that all of the products that they are selling and all the ingredients they're sourcing areas safe as possible. So, it does lie in their hands as well, but then the consumer deserves an extra level of protection from the government to make sure that all of these companies are meeting the standard that are there, and that, the imported products are coming in and as safe as they need to be.

VELSHI: Chris, quick question for you. On some levels, a lot of people say if you buy yourself locally you have a better handle on that thing. I happen to think that's not economically sound, but is it even true? If I were to buy things locally, am I -- is it going to be safer if I'm buying things that come from America?

WALDROP: Well, it depends what you're buying. You know, if you're looking at food, there hasn't been a whole lot of studies showing that, you know, local produce is as safe as imported produce. So, we're really not sure. You do have better handle on where it's coming from, perhaps, if you're buying from a local farmer, you know that farmer, know his practices are. That might be a better solution, if that's what you're looking for.

ROMANS: Chris, just a couple seconds left. OK, on the fish, these five kinds of fish. Supposed to eat fish because it's good for me, but now I'm scared what kind fish I should get and don't even know really where it came from. Should I not be eating so much fish?

WALDROP: No, I wouldn't advise that at all, because it has nutrients. The U.S. does have country of origin labeling for seafood, in this country. So, when you go to the supermarket you can look on the piece of fish that you're buying, see where it's from and then buy accordingly.

ROMANS: All right, Chris Waldrop.

VELSHI: Chris, good to talk to you. Thanks very much.

WALDROP: Thanks so much.

VELSHI: Good discussion. Chris knows a lot about -- that the issue. The scary part is, we still have no sense of how do I avoid this? WE don't know where the next one's coming from.

ROMANS: And that's just fish. I mean, you got the toy trains, the Thomas the Tank Engine trains, I mean, my son was playing with those trains. You know, I mean, it really all starts to become a very interesting issue that, a lot of people at fault. What do we do?

VELSHI: We didn't get a chance to talk about the pizza, because we're going to do that when we come back. You're getting less moo for your money, because milk prices are rising. We're going to look at whether there's there a break in sight?

ROMANS: And later, the camp where your computer repair woman of the future just might be learning her craft.

(COMMERCIAL BREAK)

VELSHI: Prices have been rising per gallon.

ROMANS: And it's not the stuff that you putin your gas tank.

VELSHI: Yeah, I mean, we talk about how much gas have risen over the last year. If you actually compare it to something else that you buy in gallons, perhaps, you'll find out that milk has been rising faster than gas.

ROMANS: And at my house, we drink an awful lot of milk. Whole milk -- you know, anybody who's got a kid, anybody who's drinking a lot of this milk knows that you're talking about more than $3 a gallon, $3.25 a gallon, the Labor Department says the cost of milk was up 19 cents per gallon in the past two few months.

VELSHI: And you're right.

ROMANS: $3.26.

VELSHI: $3.62 in a gallon in May. And it turns out that your milk bill actually isn't disconnected from your gasoline bill because one of the reasons they're charging for more milk, is the rising price of livestock feed, which is driven, as you're -- we've talk about before, by the demand for ethanol, which is made from corn.

ROMANS: And Jennifer Westhoven is here, the lovely and talented Jennifer Westhoven. She's going to help us figure where dairy prices are headed. I mean, this something -- you can stop driving or you can cut back on driving, but when your food prices go up, you can't cut back on food.

JENNIFER WESTHOVEN, CNN NEWS CORRESPONDENT: You can't and especially if your kids drinking a lot milk. You want them to have that.

I want to thank you for the warm introduction, because I've got bad news here. You know, and I feel bad you know, delivering it. Which is that we've got prices already going up and now the forecast is that they're going to jump even further in July, because us a know, the government is involved in a pricing of milk. The minimum levels that the farmers can charge, this is at the wholesale level, but they're raising that.

But, there are a lot of good reasons for it, right? Farmers are saying we've got to pay so more for corn right now, we and can't feed the cows. It's costing more. We need more money. But, at the same time, it means we're seeing already, as the government made this change, the prices are probably going to jump even more in July.

And another reason is, June was National Milk Month. And that meant that a lot of grocery stores had promotions, they had coupons, they had all kinds of specials on milk. Those are going to disappear, and then we're also going to have this jump the other way, too. ROMANS: Sometimes they have milk be a loss leader, you know,

VELSHI: Right, to get new the store.

ROMANS: To get you in, because you have to buy the milk and then buy the more expensive higher margin, processed foods after that.

VELSHI: However, as we've discussed, you know, the milk experience you know because you've a little one in the house. I have no children, as we -- that I know of, but -- one of the places that this is affecting us is pizzza. If you order a cheese pizza, Dominoes, other places, are actually in some cases charging more for it because it's working its way though other things that -- milk is used in a lot stuff.

WESTHOVEN: Everything dairy goes up, so it's -- Pizza Hut is now charging cheese as a topping, if you get a cheese topping because they do 300 million pound of cheese a year, they got to cover it. But you know, Hershey milk chocolate, they're looking at higher prices, Starbucks. I mean a latte, is what -- this much coffee and this much milk. They are saying they are being hurt by these rising dairy prices, as well. So, you're starting to see this chain reaction. Here we're all dealing with higher gas prices. Now we're dealing with higher gas prices over here because we're trying to cut...

VELSHI: And they're both things that affect the amount of money you have to spend so, it's about your inflation -- your own personal inflation because if you have to buy milk and gas.

ROMANS: Right, you could take core CPI you take ex-food and energy, but food and energy are the things I most notice.

WESTHOVEN: And then the fed just said, oh, some of the signs of inflation are pulling back a little bit. So, we can of take it easy.

VELSHI: Not if you have cars and a kid at home.

WESTHOVEN: Yeah, for everybody who's out there at the grocery store, it's really hard to work with this.

ROMANS: I keep talking about this interview I had a couple of weeks ago with this guy from the Center for Food Safety. Fascinating, he said our push here in this country to burn what we grow, biofuels, is also going to push us into more reliance on imported foods for other things, which is going to mean higher prices and more reliance in imported food, so it all kind of goes together.

VELSHI: And the dangers that we now see if we can't control...

ROMANS: It's interesting that the macro economics changes to the food supply that are happening.

VELSHI: And you think about the price for a salad and then the price of a burger is less. When you think about how much salad and corn and -- you had to use to make the hamburger. It's crazy.

VELSHI: Jennifer, it's all part of the circle of life.

WESTHOVEN: And government subsidies.

VELSHI: The circle of life and government subsidies.

Coming up after the break, why one of the big airlines that you have to choose from is melting down with summer travel season. We'll tell you that when we get back.

(COMMERCIAL BREAK)

VELSHI: OK, the best stories are the travel stories and you have one of them.

ROMANS: You know, I just tried to get to Detroit for one day, that's all I was asking. I just had to get to Detroit to do a story, and I got the story done, but you know, every flight I was on got cancelled? I was one Northwest Airlines flight, and then it got cancelled. And then they bumped me to the next one and then that one got, cancelled. Then they put me on an earlier one. I did finally made it, but not without a lot of waiting in line.

VELSHI: And it wasn't just you. Northwest Airlines in a lot of hot water just as summer travel season starts. Last weekend the No. 5 U.S. Carrier cancelled more than 10 percent of its flights. Now, this has been going on all of last week. Northwest says some bad weather the they in the Midwest, earlier in the month, air traffic restrictions. All sorts of things, and pilots calling out sick is what's behind this whole thing.

ROMANS: The pilots' Union says the real reason for the cancellations is worker fatigue. The Northwest pilots' contract says flight time limits at 90 hours a month and due to cutbacks, many pilots have reached that limit already.

VELSHI: Now, the federal aviation administration sets the limit at 100 hours a month. I think they need to work this out and the airline needs to plan this out, and they've got to talk to the union. I don't really want my pilots working more hours than they're supposed to. There are a lot of industries where I don't mind people working hard, including mine. I'd like pilots to go home when the shift is over.

ROMANS: But, it's not the only place where you've seen some union action that's sort of affecting what you fly or what you read, perhaps. The "Wall Street Journal," also, on Thursday this week, some of the reporters there coming in late or, I think, not coming in at all. I'm not sure about that, but definitely coming in late, because of their own union issues and their own issues in the workplace.

VELSHI: It's kind of interesting to see, because we have not really seen in most industries, particularly large industries, effectiveness from unions in the last few years in terms of going on strike and actually holding things up, but a couple of examples this week. We'll keep an eye on both of those stories.

ROMANS: All right, coming up on IN THE MONEY: Why one of America's richest men says the taxes you're paying aren't fair.

VELSHI: I've been saying that for a long. Nobody listens to me.

Later on, business we'll talk about businesses where they still think that you, the customer, is always right.

ROMANS: No? The customer's right?

VELSHI: Yeah, believe it or not. Stay with us for that.

ROMANS: On next week's IN THE MONEY, we're going to take a special look at the cost of obesity. You've heard the health risks, but you probably don't know how much growing waistlines are shrinking your wallet. We'll spend the hour chewing the fat next week on IN THE MONEY, Saturday at 1:00 p.m. Eastern, Sunday at 3:00.

(COMMERCIAL BREAK)

(NEWSBREAK)

ROMANS: You know, that saying is, the only sure things in life are death and taxes. Well, some people in this country don't buy that, the second part, anyway. There's a small group of Americans who think they're above the law, refuse to pay their taxes year after year, breaking the law routinely do so.

VELSHI: They actually claim that there's no law that requires people to pay income tax. You've probably heard this yarn before. New Hampshire residents, Ed and Elaine Brown are a couple people who share that school of thought. They've been convicted of tax evasion, get this -- They're refusing to serve time for it. Allan Chernoff has the story.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Convicted tax evaders, Ed and Elaine Brown, are refusing to do their prison time. They're in a standoff with officers who intend to bring them in to custody. So 64-year-old Ed keeps as handgun ready, holed up at his concrete reinforced home with his 66-year-old wife anticipating U.S. Marshals will come charging up his private road.

ED BROWN, CONVICTED TAX EVADER: Expecting them 24-hours a day. Right now, even. All of us.

CHERNOFF (on camera): Is that why you're holding a gun in your belt?

ED BROWN: Everybody knows I've -- I've carried a gun in my belt for, let's see now, 40 years.

CHERNOFF (voice-over): The Browns were convicted of tax evasion, but they claim there's no law that requires anyone to pay income tax. So, they argue their conviction and its sentence of more than five years, is illegal. The U.S. Marshal has written two letters to the Browns instruct ding them to surrender peacefully, but Ed, a retired exterminator and Elaine, a dentist, refused.

ELAINE BROWN, CONVICTED TAX EVADER: We're not walking in. We're not volunteering because we have committed no crime, and we will not go to prison for non-crimes.

CHERNOFF (on camera): So, you're saying it will have to be by force?

ELAINE BROWN: Yep. And they're going to have to -- I don't know how they'll do it because we will defend to the death.

CHERNOFF (voice-over): it's a standoff, the Browns warn, that could end like the deadly Ruby Ridge conflict. Indeed, Ruby Ridge survivor, Randy Weaver, whose wife and son were killed in the 1992 shoot-out with federal marshals, came to Plainfield to stand by the couple.

RANDY WEAVER, RUBY RIDGE SURVIVOR: Hopefully, you get a peaceful settlement out of all this so no one gets hurt, that's why I came down here.

CHERNOFF (on camera): The U.S. Marshal Service cut utilities to the Browns earlier this month hoping that might force them from their home. But, the Browns say it's not much of a hardship, partly because they have their own wind turbine and they have some solar panels providing some electricity. And when it gets cold in the wintertime, the Browns say they have 103 acres of land, plenty of wood for their wood-burning stoves.

(voice-over): U.S. Marshal, Steven Monier (ph) declined to appear on camera, but told CNN, "We have no desire to engage in a violent confrontation with the Browns, but the warrants aren't going away. They will serve their prison sentence."

Neighbors say they worry their pastoral country could see bloodshed, fearing the local police department of the three officers may have to take on the Browns if federal authorities don't.

CARLA SKINDER, NH STATE REPRESENTATIVES: The U.S. Marshals have been very patient. I think they're caught between a rock and a hard place. If they fire first, they're going to be at fault, if they fire second, they're going to be at fault.

CHERNOFF: All sides say they want to avoid violence, yet with the Browns talking tough and the U.S. Marshal maintaining patience, there appears to be no path to a peaceful resolution.

Allan Chernoff, CNN, Plainfield, New Hampshire.

(END VIDEOTAPE)

VELSHI: I remain speechless about this type of story. It's remarkable. I think -- well, there are many of us who think that the taxes we pay might be unfair, but I got to pay them.

ROMANS: Right and don't hole ourselves up into our house and not pay them. I mean, the vast majority of us are law abiding citizens and we do pay our taxes. But, many of us also thing that the tax code is unfair. You know, even the second richest man in America thinks so.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, BILLIONAIRE INVESTOR: I'm a member of this club. Didn't ask to join it, they drafted me. It's called the Forbes 400, and we don't have a secret handshake. We don't have a secret tree house that we meet in, you know? No -- none of that stuff, but we do have this secret. The 400 of us, I will bet, pay a lower tax rate than the federal government, counting payroll taxes, than our receptions do or maybe even our cleaning lady.

(END VIDEO CLIP)

VELSHI: Now Warren Buffet made those comments at a campaign fund-raiser for Hillary Clinton. The question is, of course, why do super rich people like Warren Buffet get a lower tax rate than you and me do?

ROMANS: You know, the simple answer is Life isn't fair! The rich get richer.

VELSHI: But, we actually have to do a little better that that so we brought in Donna LaValley. She is a tax attorney with JK Lasser and has studied and written these things.

First of all, about Allan's story, it's not legal to not pay your taxes?

Donna LEVALLEY, TAX ATTORNEY: No, it's not. You may not like it, you may do it grudgingly, but you have to do it.

ROMANS: And if you don't, you're in for a world of pain, I mean, in terms of fines and...

LEVALLEY: Yeah, and it seems like he's holed up. He doesn't get a paycheck, he doesn't go to work. So, it's not like they can attach his assets, because that's what they would do to normal person, just garnish your wages, take your bank account, and start getting satisfaction before you even gave it too them.

VELSHI: There's a sense that people will always say that the rich less in tax, but when Warren Buffet says it, it's like, well OK, they're agreeing with us. The rich folks are agreeing they're paying less. Is it true?

LEVALLEY: Well, to some extent, yes. Part of it is the way people are taxed. And in this case, he's including Social Security taxes, in what he's saying people pay overall. And that's not really fairness, necessarily, because that's tied to an insurance benefit. You're getting a future benefit for those payments, so...

ROMANS: So, it's not really a tax.

LEVALLEY: So, it's not really a tax...

VELSHI: Kind of insurance.

LEVALLEY: A type of insurance that comes out of your paycheck and it feels that way. Because it stops at a certain point, it definitely hits people who meet under the cap or up to the cap, $98,000. If you make significantly more than that it becomes a smaller part of the tax you pay.

ROMANS: It is remarkable to me that Warren Buffett sat there and said I bet anybody in this room a million dollars that the people who work for you are paying a lower tax rate. That's really remarkable. I mean, people hit by the AMT, alternative maximum tax you know, it seems as though some of the things that were meant to make sure that rich people are the wealthiest --

VELSHI: They have to balance it out a little bit.

ROMANS: Right. They are kind of working against us now.

LEVALLEY: Well and in the case of Warren Buffett and some other folks, who get a significant part of their income from capital gains. Well the cap on that is 15 percent. But if your basing your wealth on income, maximum, 33 percent. If you reach a certain point of income, you loose personal exemptions, you (INAUDIBLE) out of your itemized deductions, so it gets even more aggressive as you get higher. It's how you earn your money. It's where the money comes from and how much you're paying Social Security taxes that really sort of get you to that point of paying more than someone who has lots and lots of money. And the AMT, that is the other sort of kicker that comes in and you don't have to be wealthy to pay it.

VELSHI: We're big do it yourselfers, your book, taxes, it all encourages people to do their own taxes but it sounds to me if you need strategies to fix it what can the average person do? What can the viewer do to get out of this or are you stuck?

ROMANS: I recommend getting rich like Warren Buffett. Then all your problems are over.

LEVALLEY: That would be great. Maximize the tax free way that don't impact your bottom line, like max out your 401(K). I.R.A.s, putting money to work for you in the best way you can, unfortunately the things that people do to lower their regular tax burden and make them vulnerable to the AMT, because it is a flat tax.

You loose all the deductions that you are starting to pile up, and parlaying into lower taxes, if you get too good at that, you could wind up with AMT and paying more. It's a sticky situation. A kind of a tax trap in a way, and they aren't really things you to fix it too much. Because they like from the people who are supposed to be paying it.

ROMANS: The middle class tax. Like Congressmen addicted to all of these, the middle class. Let me ask you do you think that there is any chance of is there a need for serious tax code reform? LEVALLEY: I think so. Especially the last six and seven patches, to you, to your kids, if you have a house, so much paperwork. So much compliance.

VELSHI: Trying to back up and start again, almost.

LEVALLEY: Almost. Think about it has to be a revenue collection system. Not a place for politicians can give back to political constituencies.

ROMANS: And lobbyists. There are industries devoted to these deductions, the tax lawyer industry as well, accounts, the whole bit.

VELSHI: Isn't Donna a tax lawyer?

ROMANS: She is!

LEVALLEY: What -- I don't work for the Internal Revenue Service.

VELSHI: If you run for office come and let us know.

LEVALLEY: Thank you. Virtually, when you tell people I'll bring home a little less but you'll get to take home more, that is not the most popular message. People like the benefits of services they get. And a largely part they just like a little bit miffed when they have to pay for it.

ROMANS: All right. Donna Levalley, thank you so much for joining us.

LEVALLEY: Thank you for having me.

ROMANS: Up next on IN THE MONEY, see if you're as sick of the iphone as Ali is.

And later how the Geek Squad is redefining your ideas of a geek.

(COMMERCIAL BREAK)

ROMANS: Have you heard enough yet about the Apple iphone?

VELSHI: If you think you have heard enough about it you have nothing on Allen Wastler. He joins us now to talk about stories that clicked this week on Money.com

ALLEN WASTLER, MANAGING EDITOR, MONEY.COM: I am so tired of the iphone. Oh, my god.

ROMANS: Apple, (INAUDIBLE) love this iphone.

WASTLER: I know, and we see it on the Website, all the little clicks. Any time we put on anything with iphone everybody's there clicking on it.

ROMANS: Your counterculture is what you're telling us? WASTLER: You know, it's just folks, it's a phone. OK? Let's not go wild here, but they're just going wild. I'm a little insulted, because I'm a self-important journalist and self-important journalists everywhere should get a model.

VELSHI: And did we?

WASTLER: No.

ROMANS: This is a case of sour apples.

VELSHI: Exactly right.

WASTLER: Only like four or five journalists got advanced.

VELSHI: They thought was good, because they got advanced.

WASTLER: So, mm on you! I rant more about that on the Website.

VELSHI: It's worth clicking on.

WASTLER: Check it out. Let's talk about more serious financial news that people are interested in. The Fed decision. Right. The Fed stood bad again.

VELSHI: For a year, it's been a year. They haven't moved interest rates.

WASTLER: I'm loving it. It affects everything from your home loan to car loan to your belt loan. Everything. The price of money. So I'm watching and, of course, you know, thousands, hundreds of thousands of people come to the Website, check out the number. Then disappear. It happens now -- so it's a big clicker.

VELSHI: Five and a quarter percent worth, it has been for an entire year, has it affected you? It means the prime rate is 8.25 percent.

WASTLER: A little high --

VELSHI: Higher than that. The prime rate is what your adjustable loans are linked to.

WASTLER: It is true and it is important to watch. The Fed is trying to decide is the economy so soft that we need to make some cheap money out there's or do we need to keep worrying that inflation will come back in, do we keep the rate up? Walking a tightrope and they soften their tone on inflation a tad, to be less hawkish is how you stay on Wall Street.

VELSHI: Because they don't buy milk and gasoline. They think inflation's not a problem.

WASTLER: I am seeing, when I go to the grocery store I'm paying more now. Anyway --

ROMANS: Tell me why I should feel sorry for the fancy superrich hedge funds who have been hit by the sub prime mortgage?

WASTLER: That was another big one for us on the Website. And a lot of people piled in to that. First you think an esoteric Wall Street thing, but --

VELSHI: Hedge funds affected by sub prime mortgage --

WASTLER: When you think about it, these days when you take a mortgage, it isn't from George Bailey down to the savings and loan. You take it, that bank packages that mortgage off and passes it off to these hedge funds and pension funds, things like that. There's more of these securities around than you might think. So when one gets if trouble, like this particular hedge fund at Bernstein's, which had a lot these sub prime -- i.e., people can't paper the bills loans out there, it starts waffling and there's a ripple affect on Wall Street.

A big bond guy, Bill Gross, big in the bonds, he is called the bond king. He's more worried it's going to spread to everybody. A lot of people are thinking, you know where are all of these loans hiding. Could it really come around and bite not just Wall Street firms but you. For instance you might want to check out if you got a mutual fund in the bonds and stuff like that you never know what the hot shot manager might of said, well I will buy a few of these.

ROMANS: So packages sold and traded and --

WASTLER: You got to worry about it. It sounds complicated. But you should worry. You should worry a lot. Sub prime -

ROMANS: Have a great weekend.

VELSHI: Allen Wastler giving us the love.

ROMANS: All right. About 200,000 more women than men graduate from college every year but the girls are still way behind the boys in the field of technology. One new program for high school students hopes to change that.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Lately it's computer build day. Happy?

UNIDENTIFIED MALE: Whew!

UNIDENTIFIED MALE: Yeah.

ROMANS (voice over): Here at a Mother McCauley High School in Chicago, girls are getting excited about technology.

UNIDENTIFIED FEMALE: It will go, gold side down. You should point it down at the black. There you go.

ROMANS: It's part of a summer camp put on by Best Buy's Geek Squad to help bridge the technology gap between boys and girls. The U.S. Department of Education reported that in 2000, women earned only 28 percent of all computer and information science degrees. KATHY HEISE, MOTHER MCCAULEY HIGH SCHOOL: Research that shown that if you don't engage women in technology, in the k through 12 range they will not pursue it in college and they will not pursue careers that involve technology or specialize in technology. We want to change that. Clearly, this is where the world is going.

RYANNE WILSON, TECH CAMPER: We learn how to use a GPS system. We've been playing games, learning how the network works.

UNIDENTIFIED MALE: Moving on --

ROMANS: These junior high and high school girls build computers, learn about digital photography, make their own network cables and even make jewelry out of computer parts. All with female role models to show the way.

UNIDENTIFIED FEMALE: The other end in here. Go ahead, hit the button twice. Whew!

UNIDENTIFIED FEMALE: Finally, after six tries.

UNIDENTIFIED FEMALE: You're good.

MOIRA HARDEK, GEEK SQUAD: Seems to be the, misperception that women and technology don't belong together. A big part of this camp, bringing technology to the girls, to introduce them to it, know it's not scary and definitely something for them.

MOLLY MORRIS, TECH CAMPER: The hard drive, DVD or CD drive. And we have a little fan. It's really fun. Like I didn't know a lot about computers, but now I know, like what a memory is and we know how to build it now.

HARDEK: I think this is a great first step. So you look at the pipeline and women not going in to this field, there's not a lot we can do about that, expect start with them young. Breaking the stereotype will be a big difference.

ROMANS: A difference Geek Squad it says it hopes to expand to more schools in the future.

UNIDENTIFIED MALE: Cool?

UNIDENTIFIED FEMALE: Very cool.

UNIDENTIFIED MALE: Very cool. All right.

(END VIDEO CLIP)

ROMANS: Those girls really are energetic about learning about computers and technology that opens up new education --

VELSHI: It's 2007. It is about not about necessarily about becoming a technician or a computer scientist. It's about knowing how everything around you works.

ROMANS: Absolutely.

Coming up next on IN THE MONEY, see how your charitable giving measures up to the rest of the country.

(COMMERCIAL BREAK)

ROMANS: If you donate money to charity last year you help set new national record. Americans gave nearly $300 billion to charity in 2006. That's the highest number yet. The number of companies were right there with you.

VELSHI: There's an organization called the Global Business Coalition on HIV Aids, tuberculosis and malaria, it is made up the companies that are tackling these ongoing international health problems. The GBC for short recently recognized Eli Lilly's CEO Sidney Taurel for that company's work against tuberculosis. Former U.S. ambassador William Holbrooke is the coalition's president. I sat down with both of them. Holbrooke says business has a part to play in the fight against disease.

(BEGIN VIDEO CLIP)

RICHARD HOLBROOKE, GLOBAL BUSINESS COALITION: We are not winning the war on Aids, and when people talk on World Aids Day about progress, it makes me very upset. The only real measurement is if we reduce the number of people who are HIV positive, and that is not happened. Today, 15,000 people will be infected around the world with Aids alone. Now, here's what's really bad about that.

Ninety five percent of them will not know their status until the year 2015, eight years. During those eight years, those 15,000 people will be unintentionally infecting people around the world. Unless we work in prevention, unless we test people, unless we deal with this issue head-on, plus the issues of tuberculosis and malaria we are going to face a completely out of proportion expense, all in all, our core message is this business has a role to play in addressing these enormous issues.

VELSHI (ph): Mr. Taurel what is that role and why does business choose to take that role? Because it's good public relations or what they call good social responsibility? Or is it because of the effectiveness that business can have?

SIDNEY TAUREL, CEO, ELI LILLY: Well, the problems of HIV Aids, of malaria and tuberculosis are problems have a human, economic, even security dimension. It's important for businesses which is I engage totally to be part of this solution here. Yet it's part of the broader trend towards total corporate responsibility and business in taking its responsibilities to all of society in a broader sense than what we used to do looking only at the interests of our shareholders.

HOLEBROOKE: I don't care what their motives, if it improves their image, they deserve to improve their image. These are incredible issues. If a company can do something to make a difference, let's give them some applause for it. If you want to question their motives, which is a time warranted issue, fine, but, still I say to the other companies, to the other people who are doing nothing, what are you going to tell your children and grandchildren when they ask you in the future what did you do in the war against HIV Aids? The worst health crisis in history, I'm not worried about motives. I'm worried about action.

VELSHI: It's good more business that is fine. If they're changing the world, that's what you want.

HOLBROOKE: Companies like Eli Lilly have the fiduciary responsibility to they're shareholders, I respect that.

TAUREL: Just add something. In an environment where corporations are much is maligned it's very, very important to show that business can give force for good. Business is the best thing that America has to export, and if we all play responsible leadership roles, I think we can improve this image of Corporate America.

(END VIDEOTAPE)

ROMANS: Makes good business sense to have a healthy world economy and world market for your products and for, you know -- I mean, there are fiduciary reasons, there are moral reasons, and there are lots of reasons for business to get involved.

VELSHI: And the interesting thing here is it allows you as a consumer to make choices about the types of companies that want to support. Because you want to support businesses that reflect what you do. American, as we said, Americans have been very charitable. They really, really are. I think I read that 65 percent of people who make under $105,000 donate to charity.

ROMANS: That is remarkable. What we as Americans give to charity is more than the GDP of a handful of nations like Denmark.

VELSHI: Americans really, really are --

ROMANS: So that's something that really, gosh, you talk about American image around the world, really interesting about just how much money we do give.

VELSHI: There are somewhere around half a million children living in foster homes across the country. We met a man who brings the skills he learned in Corporate America to some of those children.

(BEGIN VIDEO CLIP)

VELSHI (voice over): Melvin Washington spent much of his life with a foot in two different worlds. For over three decades, one foot was in the corporate world working in engineering and financial roles at AT&T and Citibank. The other foot was in the nonprofit world, volunteering in his off hour force the Red Cross and others, but in 2003, Washington made a choice to step completely in to his second world.

MELVIN WASHINGTON, BOARD MEMBER, HALE HOUSE: Having the opportunity to be truly engaged and help an organization to grow is the thing that really motivated me to make the transition.

VELSHI: So taking the management skills he learned in Corporate America, Washington put them to work helping places like the Hale House a non-profit in Harlem.

WASHINGTON: We are providing education, opportunities and care for baby, infants, up through three to five years of age and then transitional living facility, whereby we are providing the next step for mothers and kids who are transitioning from streets to permanent housing.

When I first walked in to the residence center, and saw those little kids, I was hooked on Hale House. I think the kids are really our future and it's anything that I can do to help kids thrive and grow and succeed is what I wanted to dedicate my time towards. Something that is clearly in my DNA.

(END VIDEO CLIP)

VELSHI: Still to come on IN THE MONEY getting it right. We are going to take a look at some companies that really do think that the customer --

ROMANS: ooh.

VELSHI: Is actually always right. Stay with us. We'll name names.

(COMMERCIAL BREAK)

ROMANS: So Ali, the button on my jacket, it got crushed at the dry cleaner. I tried to sue for $54 million, nothing happened. Still wearing the broken button, because I didn't get anywhere.

VELSHI: I'd have to do the show on the own if you had won. I'm happy. There was another incident we've been following a D.C. court decided that a man who tried to sue his dry cleaner for several million dollar for allegedly losing his pants didn't have a case.

ROMANS: Yeah. That got us thinking about customer guarantees, customer service, in general. My button notwithstanding --

VELSHI: You know we are the ones that stand out to me, not here any more. But Dominos, 30 minutes or free.

ROMANS: A 30 minute guarantee or free. Yeah. They got in trouble because --

VELSHI: Yes, driver got into an accident trying to make the 30 minutes. So they changed it to satisfaction. Total satisfaction guaranteed. But you sort of looked at other places and what kind of guarantees there are. Another urban legend, maybe, maybe not, Nordstrom. The somebody taking a tire back to Nordstrom.

ROMANS: Comment about that, they do take back anything at Nordstrom no questions asked, return policy. And employees are empowered to make decisions. Where you start to get it right with customer service. Don't have to wait for a supervisor to say, yeah it is OK.

VELSHI: It doesn't seem overly bureaucratic.

ROMANS: Right.

VELSHI: I did talk to one of our producers around here who had friends who worked in Nordstrom who said they have actually seen people try to grab things in the store and get a refund for them. It's the cheating and thievery that a lot businesses say stop them from offering liberal return policies. But there are still some.

ROMANS: Good customer service is, you know, is returned. Let's talk about Four Seasons, for example. This is someplace that is known for its customer service. Like an on-sight historian at every place.

VELSHI: It's a historian about guest preferences. They're there to make sure that they know what you like. So that's a good thing, obviously, in the service industry. Enterprise Rent-A-Car is another one, they offer the pickups and the drop-offs and I understand that the promotions are often based on --

ROMANS: Customer feedback. That's good. I'm a person, I don't know about you, but I send letters. Washington Mutual has concierge's greeters and the worker compensation also tried to customer loyalty that is banks. That's got a good ring now, too.

VELSHI: We talked before about banks that offer, a bank that goes half an inch further is probably going to get a lot more customers.

ROMANS: What about when you wait on hold over and over and over again. One reason I would move away. Amazon.com ranks number one in retail customer service, no waiting on hold.

VELSHI: Because --

ROMANS: Why?

VELSHI: You can make an appointment for them to call you back. That's the idea. Which sounds fair to most people. I need five minutes with you guys. Call me back in an hour, two hours. Whatever the case is. That is an interesting concept.

ROMANS: Is there something wrong with customer service in America?

VELSHI: Yeah. Whenever something goes wrong, the feedback we get from people, I think it's -- it's one of these things that really makes people irate, because they just feel that as we go further and as we save companies more and more money doing a lot the work companies did by buying on the Internet and ordering them, we're not benefiting from the advantage. Companies are getting more careless.

ROMANS: I think the reason people say, flying now is such a horrific experience or going to the store, you know, you don't get any customer service. It used to be those things were luxuries or they were rare events. You were treated like they were a rare event. Now we just -- it's the bus depot wherever you go. No offense to bus depots. People after people, maybe there isn't that feeling that the customer is always right or customer service matters. As you can see, some places it does.

VELSHI: What about the button?

ROMANS: The button is fine. That's the difference. I don't think that customer satisfaction guaranteed means there's time to complain on my button.

VELSHI: We didn't even notice any thing was wrong with the button.

ROMANS: I did notice you were wearing a different color vest today.

VELSHI: I am, and I can't blame the dry cleaner. They actually lost my original vest, no. I chose to do this.

Thank you for joining us for this edition of IN THE MONEY. You can catch Christine later today at 6:00 pm Eastern on "Lou Dobbs This Week."

ROMANS: And you can see Ali every weekday morning on "American Morning." We will see you back here next week.

VELSHI: Saturday at 1:00 and Sunday at 3:00. See you then.

(COMMERCIAL BREAK)

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